Stanford White’s Backdrop for the Panic of 1907

The headquarters of the Knickerbocker Trust Company, by McKim, Mead,
and White (photographed in 1905; the facade is now entirely
transformed).

From left: The Knickerbocker Trust Company in 1904; in 1952,
after its 1921 enlargement; and as it looks today.

THE continuing banking debacle presents some parallels with the sad case
of Charles Tracy Barney, who in the Panic of 1907 lost control of the
Knickerbocker Trust Company, which shut down to his disgrace. And just
as Mr. Barney’s tragedy was playing out, the seeds were sown for the
mutilation of his superb 1903 bank at Fifth Avenue and 34th Street,
designed by Stanford White.

Mr. Barney was well connected in social and business circles when he
became president of Knickerbocker Trust in 1897. In the next 10 years
the bank’s deposits grew to $61 million from $10 million, and in 1901
Barney retained McKim, Mead & White to design a 14-story bank and office
building at the northwest corner of 34th Street and Fifth Avenue, as
important a location as is 57th and Fifth today.

For reasons unknown, Mr. Barney scaled the project back to three
stories — but oh, what stories! Stanford White created one of the most
spectacular banks in New York, a sumptuous Corinthian-columned temple of
Vermont marble on the outside and Norway marble inside the high banking
room.

Just before it was completed in 1903, the city brought suit to scale
back Mr. Barney’s temple, noting that its columns, cornices and steps
extended out onto the public sidewalks by as much as 15 feet. Such
encroachments had long been commonplace and even, at least on Fifth
Avenue, expressly permitted. But pressure was building to widen Fifth
for the increasing glut of vehicles.

The Department of Buildings had approved the project every step of
the way, but litigation persisted for years amid sympathy for the bank
and its willingness to build a civic ornament. In November 1906, The
Real Estate Record and Guide predicted that surely “special
arrangements” for “really beautiful buildings” could be made.

The Knickerbocker Trust Company’s banking room in 1904.

The year 1907 saw an unsettled, declining stock market, a budget
crisis in New York City, continued economic fallout from the San
Francisco earthquake the year before, and other financial problems. In
October, several banks connected with Charles W. Morse and F. Augustus
Heinze failed.

Both men were held in low regard by many in the financial community.
Indeed, Mr. Morse was convicted for bank fraud in 1910 in an unrelated
case and, according to “The Panic of 1907” by Robert F. Bruner and Sean
D. Carr (Wiley, 2007), while in prison met Charles Ponzi, who developed
the infamous pyramid scheme.

When it became known that Mr. Morse and Mr. Heinze were associated in
some projects with Mr. Barney, he was obliged to resign from the bank he
had helped create on Monday, Oct. 21.

But in that nervous climate, rubbing shoulders with such men was
enough to precipitate a run on the Knickerbocker. On Tuesday, Oct. 22,
so many depositors showed up that the police were called in to keep
order.

The Knickerbocker Trust and The Waldorf-Astoria Hotel, charcoal and
pastel on brown paper by Joseph Pennell, ca. 1904–1908.

Lines wound around each other in giant spirals in the great marble
banking room before snaking out the door. Men and women stood in
separate lines — women usually conducted their business in a separate
office. The bank had substantial assets, but most were not liquid, and
it could pay out only $8 million. The Knickerbocker Trust Company closed
that day at 12:35 p.m., shutting out hundreds of unsatisfied depositors.

In December, The American Review of Reviews said that the problem had
largely been caused by the “unreasoning alarm of women depositors” and
that the bank’s failure created “a veritable panic on a continental
scale.”

The financier J. P. Morgan stepped in and organized the financial
community to save most of the other faltering institutions, often by a
hairbreadth. But he had come late into the Knickerbocker crisis, and
considered it too weak to save.

The Panic of 1907 dissipated before the year was up, although some
institutions never got back on track. It all came too late for Mr.
Barney, who on Nov. 14, at the age of 56, shot himself. He lived for
four hours.

The bank’s builder, Charles Tracy Barney, around 1905. He shot
himself after the bank failed in the Panic of 1907.

Two days after the suicide, The American Architect commented coldly
that the low-rise Knickerbocker bank, “so much in fashion just now, is
really nothing so much as an advertisement,” and that “when disaster
comes, a well-rented skyscraper is a more valuable asset.”

In March 1908, Knickerbocker Trust reopened, and The New York Tribune
reported that all depositors received their money in full. That October,
The New York Times said that almost every other bank had paid off fully,
the recovery essentially complete, along with the stock market. For
instance, U.S. Steel had been trading early in 1907 at 50 3/8, and fell
to 21 7/8 after the crash. But a year later, it was back to 47 1/2.

The original Knickerbocker Trust building survived until 1921,
according to an account in The Times. The little bank then sprouted a
10-floor enlargement, also designed by McKim, Mead & White. The vertical
addition sheared off the columns and other projecting ornaments, but
left the pilasters along with much of the bank’s original character,
including the banking hall. In 1958 the lower floors, occupied by the
Bowery Savings Bank, were completely modernized, becoming sheer walls of
limestone.

The Panic of 1907 remains as a famous cautionary tale, but nothing
remains of Charles Barney’s magnificent white marble vision.

On the site previously- Exterior view of the Manhattan Club,
completed in 1869, at the corner of 34th Street and Fifth Avenue, New
York, New York, late 1800s. Built for Irish merchant and businessman
Alexander Taylor Stewart (and originally called Stewart’s Mansion), it
became the Manhattan Club following his death in 1876.